Calculator assesses green impact of inventory reduction

Wednesday, January 23, 2013

The supply chain technology provider Terra Technology on Tuesday released an online sustainability calculator designed to help manufacturers determine the environmental impact of reducing excess stocks through better demand prediction and inventory optimization.
The calculator uses three steps to measure the environmental benefits of reducing inventory and to help companies understand the magnitude of these savings relative to corporate sustainability goals.
“Carbon and water embodied in the estimated $8 trillion of global inventory is the equivalent of roughly 11 percent of the total annual global carbon emissions and 40 percent of global water use,” the company said. “While some inventory is important to ensure product availability, excess inventory stemming from forecasting error represents an enormous environmental and financial burden. By reducing unnecessary inventory, manufacturers significantly decrease their environmental footprint while lowering costs and improving return on capital.”
Terra noted cutting inventory eliminates carbon emissions and water use from many parts of the product lifecycle, including manufacturing, raw materials, packaging and distribution.
“Reducing inventory may be the single most important action a manufacturer can take towards meeting its corporate sustainability goals,” said Robert F. Byrne, president and chief executive officer of Terra Technology, in a statement. “Many sustainability initiatives tend to be limited in scope, like reducing package density for a specific product, or are tied to one part of the lifecycle, such as alternative energy for manufacturing.
“By reducing demand uncertainty for virtually all products in all locations… companies cut unnecessary inventory across their entire portfolio and realize cumulative environmental savings from many parts of the product lifecycle,” he added. - Eric Johnson